By Cameron Mitchell
Solution 105 Consulting Ltd.
“BRING ON THE HEAT”
High spot and forward market rates have pushed many retailers to move their residential offers upwards over the last few weeks. Even with those increases, the retail fixed offers available are better than floating. May electricity floating rates settled around 12.5 cents per kWh for the month. June and July forward rates suggest those months’ will be coming in at around 14 cents per kWh. Balance of 2022 is presently in the 13 cent per kWh range. We highly recommend locking in a fixed electricity rate for your homes if you have not done so already.
The forward market for natural gas is trading around $7.00/GJ for June and July. The balance of calendar 2022 is trading around $7.00/GJ also. This being the case, we highly recommend locking in a fixed rate for gas. Rates for calendar 2023 are trading around $5.45/GJ and 2024 to 2027 are in the $4.30/GJ range.
WE RECOMMEND:
Natural Gas Only: The best fixed rate option:
- EasyMax by Enmax $4.79/GJ on 5-year plan. Admin of $7.10 per month. Free termination.
Electricity Only: The best fixed rate options:
- EasyMax by Enmax49 cents per kWh on 5-year plan. Admin of $7.10 per month. Free termination
- ATCO Energy has an 8.49 cents per kWh on five-year plan. Admin of $6.99 per month. Free termination
AT MY HOUSE
I am currently on a three-year renewal offer from ATCO for 5.99 cents per kWh and $3.99/GJ (and an admin fee of $6.99 per meter per month). As there are no better options available at this time, I will stay with ATCO at my house.
If I didn’t have this plan in place, I would go with the five-year EasyMax by Enmax plan for electricity and gas as soon as possible. If rates drop or something better comes along in the future, the contracts can be terminated at no cost.
NATURAL GAS
Short term pricing sits in the $7/GJ range, with the remainder of 2022 expected to land near $7.00/GJ also. With that in mind, we highly recommend moving to a fixed rate. The EasyMax by Enmax plan at $4.79/GJ is the best option we’ve found. (There were a few retailers with slightly lower rates, but they had very high monthly admin fees.
For June, the Direct Energy Regulated Services (“DERS”) default rate is $8.037/GJ. Approximately $0.59/GJ of this figure is to recoup from previous undercharges. June’s rate would have been a further $3.17/GJ higher, but there was a $6,654,000 carry forward balance to alleviate what would have been an even greater natural gas rate shock for Albertans. Depending on how much of a carry forward balance DERS plans to have, July’s DERS rate is likely to land around $7.50/GJ. If DERS starts to pay it down, then the rate will likely be upwards of $9/GJ.
ELECTRICITY
As the forward market is suggesting electricity rates will be higher than the current fixed rate retail offers available, we would highly recommend moving to a fixed rate offer if you are not already there.
Forward pricing currently suggests index residential rates will come in around 14 cents per kWh for June and July. May averaged about 12.5 cents/kWh. At this point, the forward market rates suggest the balance of the 2022 calendar year could average around 13 cents per kWh.
If I were to pick an electricity only option today, the five-year term with EasyMax by Enmax or with ATCO Energy is the way to go – even though both recently bumped their rate to 8.49 cents per kWh. Each have about a $7.00/month admin fee, and free termination.
Just to help put things into perspective, all that we are talking about here is the commodity rates and costs, not the delivery and other regulated charges. An average house might use around 9,000 kWh and 100 GJ over a year.
COMMERCIAL USERS
And for those of you who are not residential users, and maybe a bit bigger, give us a call. We are no longer seeing better pricing for commercial users compared to residential users, but we can still help get the lowest rates for your business.